Bahraini.TV

Developments Afield

by mahmood on 03/01/08 at 10:29 am · email  · print  

Bahrain’s Gulf Finance House (GFH) will ring in the new year in style, putting the final touches to two multi-billion dollar deals in mid-December that will lock the company into major developments in North Africa and the Indian subcontinent.

On December 17, GFH unveiled plans for a new financial centre to be built in Tunisia, aiming to mirror the success of the company’s flagship project, the Bahrain Financial Harbour, which opened for business in May.

The $3bn Tunis Financial Harbour (TFH) will consist of four main clusters, comprising a corporate centre, an investment banking and advisory centre, an insurance and Sharia-compliant insurance centre and an exchange. There will also be facilities for a business school.

To be located on the outskirts of Tunis, the TFH will cover an area of 450 hectares and will also feature a marina, mixed residential complexes, commercial and business outlets and sporting facilities, making it a satellite city of the Tunisian capital.

Announcing the development, GFH chairman Esam Janahi said the strong growth of the Tunisian economy, which has a gross domestic product (GDP) among the highest in Africa, was the incentive for his company to commit to the investment.

GFH’s acting chief executive officer, Peter Panayiotou, said the move into Tunisia was part of the bank’s strategy of expanding into emerging economies with strong growth potential.

“Apart from the economic drivers behind this decision, Tunisia’s ability to provide talented human resources, with the country reporting relatively high investments in higher education as a proportion of GDP, was a key factor that prompted us to choose Tunisia as the location for our first financial harbour in North Africa,” he said.

The TFH will not be without competition though. In August, developer Sama Dubai, the international investment arm of Dubai Holding, started work on Century City, a $14bn project outside the Tunisian capital. As a business and financial centre Century City will offer office space for more than 2500 firms, as well as housing for up to 500,000 people.

Only days before the Tunisia project was announced, GFH signed up for an even bigger project, this time in India. On December 15, a memorandum of understanding was signed with the state government of Maharashtra to build an economic development zone (EDZ) outside Mumbai, with total investments in the project expected to top $10bn when completed within five years.

The EDZ will consist of four separate cities spread over 1600 hectares, focusing on energy, software, telecoms and entertainment.

The impact of GFH’s project is expected to be so great that local Indian media have suggested that residential and business property prices in nearby Mumbai could fall as housing and office space increase, drawing individuals and companies away from the old city.

According to Pranay Vakil, chairman of Knight Frank India property consultants, large scale commercial developments are invariably followed by residential projects.

“More supply in the market will reduce the pressure on housing in Mumbai and will definitely result in property prices seeing a correction, albeit over three to five years,” Vakil told local press.

Initially, GFH had only planned to develop a single entity outside Mumbai, the Energy City, and had floated a private placement initiative earlier this year, raising $630m for the first phase of construction for the $2bn development.

However, the response to the listing was so positive, Janahi said GFH had decided to take the project further, adding software, telecom and entertainment zones as well.

“The opportunities that India offers within the infrastructure and its allied sectors, such as energy, software and telecommunications are tremendous,” he told a press conference in Mumbai.

As in Tunisia, GFH is not the first Gulf entrant into the development market, with Dubai World; Damac Properties, also of Dubai; and Rakeen, the property arm of the government of Ras Al Khaimah, all committing to projects in India.

Since it was founded in 1999, GFH has undertaken economic infrastructure development projects and investments worth $12bn. Its position as the world’s second-largest Islamic investment bank should stand it in good stead when trying to attract prospective clients to both new projects.